You must describe both absolute advantage and comparative advantage.
1 mark for each valid description
1 mark for each development.
A model answer could look like:
Absolute advantages occurs when a country can produce a good or service more efficiently than another country using the same resources (1). For example, China has a large low cost labour force giving it an absolute advantage in textile production (1). The country with an absolute advantage should specialise as this could lead to increased world output and improved living standards (1).
Comparative advantage is when a country can produce a good at a lower opportunity cost than another country (1). Even if a country is less efficient at producing all goods and services, it can still benefit from specialisation and trade based on comparative advantage (1). For example, country X and Y trade wheat and cloth, with country X producing 100 units of wheat or 50 units of cloth in a day, while country Y can product 80 units of wheat or 60 units of cloth (1). Country X should specialise in wheat production while country Y focuses on cloth (1).